Coalspur finds its feet in Canada

Coalspur Mines
, a locally listed coal company that has quietly tripled its market value to $450 million since the start of the year, is hoping to gain a higher profile with investors by listing in Canada.

The company’s chief executive, Gene Wusaty, said Coalspur was “not on the radar screen" in Australia due to the fact its thermal coal projects are located in Canada’s Alberta province.

Yet the company, backed by Perth entrepreneur Gavin Argyle – previously associated with the HotCopper online sharemarket forum – has been the fourth-best performer in the ASX All Ordinaries Index this year. Shares have risen from 32¢ in January to close at $1.06, up 3.5¢ yesterday.

Mr Argyle owns 15 per cent of Coalspur after receiving shares in return for selling it a project. Highland Park – an investment group backed by the founders of nickel miner LionOre – owns 12.4 per cent.

Coalspur is developing the $US650 million Vista project, for which the pre-feasibility study is due to be completed shortly. The aim would be to export 8 million tonnes of thermal coal annually.

“The focus in Canada has primarily been on coking coal," Mr Wusaty, who is based in Canada, told The Australian Financial Review. “This has been the first big push in 30 years to become a thermal coal exporter."

Unlike many Australian projects, Coalspur will not have to compete for access to port and rail infrastructure, which is already in place in the region and underused at present.

“We’ve got world class port and rail facilities," Mr Wusaty said. “The port and rail here can handle the capacity that we can ramp up to."

Related Quotes

Company Profile

Patersons Securities analyst Andrew Harrington, the only broker to cover the stock, said it was one of his favourite mid-cap coal stocks. “There aren’t many first-world coal deposits with infrastructure that has capacity on it," he said.

The coal at Vista is very shallow, but the amount of saleable coal recovered of about 55 per cent is lower than Hunter Valley mines in NSW. The heat content is slightly lower as well, so it will attract a 5 per cent price discount. However, the estimated total costs of $C54 a tonne – nearly half of it for port and rail access – would allow it to turn a tidy profit at the current thermal coal price of $US100 a tonne.

Mr Wusaty said the freight rates to northern Asia would be similar to those from Newcastle to Japan. Vista could be in production by early 2014. It will complete a bankable feasibility study next year before a potential project approval in the third quarter, during which time it will discuss selling stakes to coal users.

“We have the same cast of characters from Asia talking to us as the ones that deal with [Australian miners]," he said, noting Japan, Korea and northern China were attractive target markets for the coal.

The Toronto listing will not be accompanied by an equity raising as Coalspur recently completed $80 million of strategic and institutional placements to help fund the purchase of new coal leases that was settled yesterday. However, Mr Wusaty said it was possible Coalspur would seek to raise some funding in North America toward the beginning of next year.

Mr Wusaty, the former chief operating officer of Robert Friedland’s Mongolian coal play, SouthGobi Resources, has assembled a management team with experience in Canadian coalmining.